On the long-run Phillips curve, the unemployment rate
A) and inflation rate can take any value.
B) can be any value, but the inflation rate equals the expected inflation rate.
C) equals the natural unemployment rate, and the inflation rate equals the expected inflation rate.
D) equals the natural unemployment rate, but the inflation rate can be any value.
E) decreases when the inflation rate increases.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical at the natural rate of unemployment, indicating that in the long run, there is no trade-off between inflation and unemployment. This means the unemployment rate equals the natural unemployment rate, but the inflation rate can vary depending on factors like monetary policy, without affecting the natural rate of unemployment.

On the Long-Run Phillips Curve, the Unemployment Rate